Marginal Utility and Diminishing Returns Quiz

Marginal Utility and Diminishing Returns: ten questions on utility and production, with concepts and calculations. Every answer is explained.

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For High school students and adults reviewing the topic.

About 13 minutes. 10 questions.

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Question 1An illustrative utility schedule gives total utility 24 at 1 unit consumed and 42 at 2 units. Find the marginal utility of the second unit in utility units, to the nearest whole number.

Enter a number in utility units.

Answers within 0.5 utility units of the expected value are accepted.

Question 2An illustrative utility schedule gives total utility 42 at 2 units consumed and 54 at 3 units. Find the third unit’s marginal utility in utility units, to the nearest whole number.

Enter a number in utility units.

Answers within 0.5 utility units of the expected value are accepted.

Question 3With equipment fixed, a workshop makes 40 parts per day with 2 workers and 55 with 3 workers. Find the third worker’s marginal product in parts per worker per day, to the nearest whole number.

Enter a number in parts per worker per day.

Answers within 0.5 parts per worker per day of the expected value are accepted.

Question 4A workshop’s total-product schedule shows 60 parts per day with 4 workers. Find output per worker, called average product, in parts per worker per day, to the nearest whole number.

Enter a number in parts per worker per day.

Answers within 0.5 parts per worker per day of the expected value are accepted.

Question 5With machines fixed, daily output rises from 55 parts with 3 workers to 60 parts with 4 workers. Find the fourth worker’s marginal product in parts per worker per day, to the nearest whole number.

Enter a number in parts per worker per day.

Answers within 0.5 parts per worker per day of the expected value are accepted.

Question 6A consumer enjoys each additional serving less, while still enjoying it. What happens to total utility?

It rises by progressively smaller amountsIt falls as the added enjoyment diminishesIt approaches the utility of the next servingIt stays level once satisfaction starts to diminish

Question 7What separates diminishing marginal utility from diminishing marginal returns?

Both concern the satisfaction employees receive from workBoth describe a fall in total output as input increasesMarginal utility concerns satisfaction while marginal returns concerns productionMarginal utility concerns production while marginal returns concerns satisfaction

Question 8A kitchen hires another cook while keeping its workspace and ovens fixed. Why might added output shrink?

The cooks may value each additional meal less as consumersThe selling price may fall as the kitchen adds another cookThe kitchen has increased its productive inputs in proportionThe fixed equipment can become a bottleneck for the extra cooks

Question 9How does marginal utility help explain the water and diamond puzzle?

Prices reflect the total usefulness of the quantities availableMarginal value depends on scarcity rather than total usefulnessScarcity means a diamond provides greater total usefulness than waterWater’s physical identity sets its value independently of its availability

Question 10A worker’s extra output is smaller than the previous worker’s but still worth more than the added cost. What follows?

The firm benefits from employing the additional personThe firm should stop hiring when marginal product starts decliningThe smaller addition indicates a fall in total productionFixed equipment makes average output the relevant hiring comparison

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